WASHINGTON - U.S. retail sales unexpectedly rose in November as the holiday shopping season got off to a brisk start, which should keep the economy on a moderate growth path this quarter.
Retail sales rebounded 0.3% last month, the Commerce Department's Census Bureau said on Thursday. Data for October was revised lower to show sales falling 0.2% instead of dipping 0.1% as previously reported. Economists polled by Reuters had forecast retail sales edging down 0.1%.
Retail sales are mostly goods and are not adjusted for inflation. Spending has cooled from a robust pace earlier this year amid higher borrowing costs.
The Federal Reserve held interest rates steady on Wednesday and signaled in new economic projections that the historic tightening of monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.
Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.4% last month. Data for October was revised lower to show these so-called core retail sales unchanged instead of the previously reported 0.2% gain. Core retail sales correspond most closely with the consumer spending component of GDP.
Economists expect inflation-adjusted consumer spending to grow at about a 2% annualized rate this quarter, slower than the 3.6% pace notched in the third quarter.
The Atlanta Fed is forecasting GDP to rise at a 1.2% rate in the fourth quarter, below what Fed officials regard as the non-inflationary growth rate of around 1.8%. October-December growth is also seen restrained by a wider trade deficit and slower inventory accumulation.
The economy accelerated at a 5.2% rate in the July-September quarter. Though growth is cooling, most economists do not expect a recession, with the labor market continuing to churn out jobs at a healthy clip.
A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 202,000 for the week ended Dec. 9. Economists had forecast 220,000 claims for the latest week.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 20,000 to 1.876 million during the week ending Dec. 2, the claims report showed.
The so-called continuing claims have mostly increased since mid-September, blamed largely on difficulties adjusting the data for seasonal fluctuations after an unprecedented surge in filings for benefits early in the COVID-19 pandemic.
"The stable trend in initial claims is a more accurate reflection of current labor market conditions than the inflated increases in the continuing claims series since the summer," said Lou Crandall, chief economist at Wrightson ICAP in New York.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
